Muni Wi-Fi Deathwatch Heralds Wide-Area Wireless RebirthMuni Wi-Fi Deathwatch Heralds Wide-Area Wireless Rebirth

With the news that MetroFi is seeking to unload its municipal wireless networks and sell itself to a larger and more stable company, what was once a shakeout has turned into a rout.

First reported by Wi-Fi Networking News, the plans of MetroFi CEO Chuck Haas follow the announcement last week that troubled Internet service provider EarthLink is throwing up its hands and walking away from the once-touted municipal Wi-Fi project in Philadelphia. In a deathbed watch longer than that of Generalissimo Francisco Franco, it seems that muni Wi-Fi has finally kicked the bucket.

The concept of municipal wireless, however, is actually not dead -- and may enjoy a revival in the next couple of years.

Only six months ago, Mountain View, Calif.-based MetroFi, one of the few pure-play providers of municipal wireless networks, was touting its "MetroFi Extend" program, designed to "increase awareness and use of Wi-Fi devices." Now the company is exiting the business of citywide Wi-Fi altogether.

EarthLink, meanwhile, last year said it would discontinue building muni-wireless networks and seek to offload its existing projects to cities or other organizations. Last week the company announced it had reached an impasse with the city of Philadelphia and would shut down the $17 million Wi-Fi system it had built at no cost to the city or its taxpayers.

"After months of negotiations with the city of Philadelphia and a nonprofit organization in which EarthLink offered to transfer to either the city or to the nonprofit -- for free -- the entire $17 million Wi-Fi network," the company said in a statement, "the transfer unraveled due to unresolved issues among the city, Wireless Philadelphia, and the nonprofit."

That's not quite the entire story, according to wireless industry insiders.

"EarthLink spent time in the last quarter of '07 and first quarter of '08 trying to find a partner on its own and didn't involve the cities," said a person familiar with the matter. "Then, when that didn't work out, they turned on Philly in April and said, in essence, 'We have to do a deal right now or we're shutting you down in 30 days.' "

Citing the confidentiality of its discussions with municipalities, an EarthLink spokesman declined to comment on the Philadelphia situation.

MetroFi, meanwhile, cited cities' "budget restrictions" as the ultimate obstacle in building out viable, moneymaking Wi-Fi networks. In fact, while EarthLink and MetroFi are very different sorts of companies, they shared one fatal strategic flaw: They tried to build extensive wireless networks without sharing the costs with municipalities and without getting firm commitments from those cities to pay for services once the systems were in place.

That was the case, for instance, with Portland, whose "Unwire Portland" initiative was once seen as a model for muni Wi-Fi projects. Earlier this year MetroFi reportedly demanded a guarantee of $9 million from the city before finishing the build-out. The Portland project has stalled and it's not clear whether or by whom it will be completed.

But while the once-ballyhooed municipal Wi-Fi business has turned out to be a massive free-lunch boondoggle, the notion of high-speed, citywide wireless networks is moving forward -- with systems being built by private companies with little government involvement.

Sprint Nextel and Clearwire earlier this month said they will combine their efforts to build nationwide WiMax networks into one company, to be called Clearwire. The new high-speed network will cover 120 million U.S. households by 2010, the companies said.

Meanwhile Verizon Wireless and AT&T, the major winners in the FCC auction of radio frequency spectrum in the 700-MHz band, are required by the auction rules to build networks open to any device and any application. And The Wall Street Journal reported today that dozens of cities across the country are building out "state-of-the-art fiber networks" at government cost -- systems that will almost certainly incorporate wireless offshoots at some point in the future.

"It's possible that in the long term, looking five years out, that Wi-Fi on a metro-scale will only be needed in small towns, odd markets, and for highly particular purposes," wrote Glenn Fleishmann, publisher of Wi-Fi Networking News, reporting on the MetroFi flameout.

In other words, the failure of muni Wi-Fi may eventually be a mere footnote in the story of the spread of wide area, high-speed wireless networks.